At this point, the last veil of replacing business tax with value-added tax has been lifted.
Among them, the life service industry is the industry most closely related to the daily lives of ordinary people. Therefore, the impact of the change of the applicable tax rate to 6% on the life service industry and how to pass on the value-added tax to individual consumers have attracted much attention.
At present, the applicable tax rate for most life service industries under business tax is 5%, while the applicable tax rate after the business tax to VAT reform is 6%. Although it is 1% higher than the previous tax rate, since the input tax can be deducted, for input tax For taxpayers in the life service industry who pay more taxes, the overall situation is more favorable.
However, due to the particularity of the industry, there are still many difficulties in the process of implementing the business tax to value-added tax replacement in the life service industry.
Difficulty 1: Industry characteristics make it difficult to determine the value-added part
First, let’s take a look at what industries are included in the life service industry targeted by the business tax-to-VAT reform?
It is reported that the life service industries that need to replace business tax with VAT mainly refer to the catering industry, accommodation industry, laundry and dyeing industry, hairdressing and beauty industry, education industry, housekeeping service industry, tourism industry and various agency services (note: cargo transportation agency, customs declaration agency, Bookkeeping agency, etc. (reformed from business tax to value-added tax) and other business formats.
Generally speaking, the single stores in these industries are small in size, the operators are relatively dispersed, and they directly face the final consumers. Therefore, it is difficult to calculate the input price of this industry and determine the value-added part.
Difficulty 2: The industry as a whole lacks VAT compliance experience
For a long time, enterprises in the life service industry have been taxpayers of business tax. Business tax and value-added tax have different accounting and tax collection mechanisms. Therefore, taxpayers in the life service industry lack VAT compliance experience. Before the full implementation of the business tax-to-VAT reform on May 1, in order to smoothly transition from business tax to value-added tax, enterprises in the life service industry must take some measures to actively respond to the changes. Based on this, relevant experts have given some suggestions, such as the need to conduct value-added tax training for financial and business personnel; to develop a set of compliance processes including value-added tax accounting and management.
Difficulty Three: The initial corporate tax burden may increase
The life service industry is mainly a labor-intensive industry, so labor costs are relatively high. In the early stages of the business tax-to-VAT reform, there may be a situation where the deductible input amount is small and the output tax amount is large, which means that the tax burden of the enterprise is likely to increase.
At the same time, we also mentioned above that financial personnel in the life service industry lack relevant VAT business experience. Therefore, companies in the early stage require financial investment in training the skills of financial personnel and establishing related supporting financial management systems, which will naturally increase the company's economic burden.
So under the current circumstances, how should enterprises in the life service industry rise to the challenge, turn challenges into opportunities, and achieve tax optimization while reducing corporate burdens? It is mainly divided into two aspects: internal and external:
Internally: First of all, we must pay attention to the relevant training of financial personnel, pay attention to the business model and organizational structure of the enterprise, analyze the impact of different tax types and tax rates on corporate taxation, and actively make adjustments to achieve the optimization of tax benefits; in tax treatment methods (General tax calculation method and simplified tax calculation method), it is necessary to carefully examine and study the method that is beneficial to the company.
External: After the business tax to VAT reform, whether the tax burden of enterprises in the life service industry will increase mainly depends on the amount of deduction items. Therefore, we must try our best to choose suppliers who can use input deductions. In addition, corporate financial personnel should also learn more about relevant fiscal and taxation policies and fully enjoy some preferential policies, thereby saving costs for the company.
Construction and real estate industry
The original business tax rates of 3% and 5% will be changed to the value-added tax rate of 11%, but the tax burden on the entire industry will not increase.
The business tax to value-added tax reform has been fully rolled out, and the construction, real estate, financial, and life service industries have all been included in the pilot scope. The construction and real estate industries are subject to a tax rate of 11%, and the financial industry and the life service industry are subject to a tax rate of 6%. . The society is generally concerned that the construction and real estate industries have changed from the original business tax rate of 3% and 5% to the value-added tax rate of 11%. Will the tax burden increase if the tax rate increases?
"If the value-added tax rate is higher than the business tax rate, it will increase the corporate tax burden. This is actually a misunderstanding." Bai Jingming, deputy director of the China Institute of Fiscal Science, believes that business tax is levied on the company's turnover, while value-added tax is levied on goods and The tax base of the two is very different when levying the value-added amount of services. Although the value-added tax rate has been increased, the tax burden of these two industries will not increase or even be reduced because of the input tax deduction.
Bai Jingming analyzed that the main inputs of the construction industry are steel, bricks, cement and other building materials, which can be deducted at the VAT rate of 17%, and the deduction is quite strong. In particular, the plan also makes transitional policy arrangements for the business model of enterprises contracting work and materials, or contracting work but not materials. General taxpayers can choose to apply the simplified tax calculation method for construction services provided by clearing contractors. Compared with the original business tax rate of 3%, the corporate tax burden remains generally unchanged.
Financial industry and life service industry
By changing the original business tax rate of 5% to the value-added tax rate of 6%, the industry's tax burden will be significantly reduced.
"How to ensure that the tax burden of all industries is reduced but not increased is both a key and difficult issue. The reform plan has put a lot of effort into this aspect." Hu Yijian, a professor at Shanghai University of Finance and Economics and director of the Institute of Public Policy and Governance, said that in order to achieve With this goal, the plan not only gives full consideration to the tax system design, but also retains the original preferential business tax policies, and also introduces corresponding supporting measures based on the characteristics of each industry.
Financial services mainly include financial and insurance business activities, such as loan services, direct fee financial services, insurance services and financial product transfers, etc. The life service industry covers a wide range of areas, including cultural and sports services, education and medical services, tourism and entertainment services, catering and accommodation services, daily services for residents and other life services.
"From a pure comparison of tax burdens, without considering input tax deductions, a 6% value-added tax rate is equivalent to a business tax rate of 5.66%, which is very close to the current business tax rates of these two industries." Hu Yijian explained , after the tax-to-VAT reform, the amount of deductible input tax in the financial industry and the life service industry will increase, and the tax burden of the two industries will be significantly reduced.
Most office spaces in the financial industry are high-end real estate, with a high degree of electronic informatization and heavy investment. Through the purchase of real estate and related equipment, as well as the outsourcing of technical services, the financial industry has a greater possibility of achieving tax reductions. Judging from the relevant details, the original preferential business tax policies for the financial industry will basically be retained and continued after the business tax-to-VAT reform. For example, interest income from financial interbank transactions is exempt from VAT, personal insurance with a term of more than one year within the pilot period is exempt from VAT, agricultural insurance is exempt from VAT, etc.
The life service industry is almost all-encompassing and closely related to people's lives. The 6% tax rate applies to general taxpayers, and there are various deductible inputs. For example, if you open a gym, rent, purchased fitness equipment, etc. can be used as input deductions; if you open a restaurant, purchase and rent of storefronts, store decoration, kitchen equipment, etc., they can also be used as input deductions.
Will the life service industry benefit from the business tax to value-added tax reform?
The "Government Work Report" submitted by the State Council for review at the Fourth Session of the 12th National People's Congress proposed that starting from May 1, the scope of the pilot program for replacing business tax with value-added tax will be expanded to the construction industry, real estate industry, finance industry, and life service industry. From then on, the business tax will be Withdrew from the stage of history. The biggest feature of replacing business tax with VAT is to reduce repeated tax payments, which can promote a better virtuous circle in society and help enterprises reduce their tax burden. "Replacing business tax with VAT" can be said to be a tax reduction policy. So, can the life service industry, which is most closely connected with people’s daily lives, enjoy the dividends brought by this “business tax to value-added tax” reform?
1. Applicable tax rates after the "business tax to value-added tax" in the life services industry
The current business tax rate for the living service industry is generally 5%. After the business tax to value-added tax reform, small-scale taxpayers in the catering industry, tourism, hotel industry, entertainment industry, etc. will adopt a 3% collection rate based on the previously issued "Business Tax to Value-Added Tax Pilot Plan". VAT taxpayers are subject to a tax rate of 6%. For small-scale taxpayers, from the 5% business tax to the 3% simple collection rate, this part will definitely be tax reduced. For general taxpayers who are subject to the 6% tax rate, whether the tax is reduced depends on the deduction situation. For example, in the catering industry, if there is a large deduction, the tax burden will be reduced compared to the 5% business tax that cannot be deducted. The previous business tax For the entertainment industry, which has a tax rate of 5%-20%, the tax rate has been significantly reduced after replacing business tax with VAT.
According to this expectation, the tax rate will be increased from 5% business tax to 6% value-added tax. Since input tax can be deducted on the purchase of goods and services, the overall tax burden may be reduced. The main challenge in achieving overall tax burden reduction will be how to obtain special VAT invoices from suppliers, especially for the catering industry that often conducts transactions in cash and in many cases needs to purchase ingredients from small-scale taxpayers.
2. Fiscal and taxation impacts of “replacing business tax with value-added tax” in the life service industry
For catering companies, a common phenomenon is that most restaurant suppliers cannot provide VAT invoices. Some suppliers are not qualified to issue VAT invoices. For some, issuing invoices will increase costs and supply prices. This cost It is likely to be passed on to restaurants, which will have to cut profits when they cannot raise prices. However, a new challenge will arise after the business tax reform in the catering industry - food sales (takeaway) need to pay a VAT rate of 17%, while dine-in only needs to pay a VAT rate of 6%. How to distinguish the place where goods or services are provided (services also include the sale of goods) may become a new hot point of controversy.
The application of the 6% VAT rate to the hotel industry should ensure that the main services provided by most hotels (accommodation, meetings and events, and catering) are subject to the 6% VAT rate. The regulations have now clearly stipulated that the input tax related to the purchased catering services, daily resident services and entertainment services cannot be deducted. Therefore, another major challenge the hotel industry will face is how to reasonably divide the package prices for meetings or events (as well as management Customer invoice requirements), meeting or event package prices often include meals or accommodation.
As far as the medical industry is concerned, human resource costs account for a large proportion, and the corresponding deductible input tax is limited. This is a medical service that has a low average gross profit rate in the industry and requires increased investment in large-scale advanced medical equipment and high-end medical talents. This is undoubtedly a huge pressure for the industry, especially for foreign and private and other social capital investment enterprises. In order to ensure that the tax burden of all industries will be reduced but not increased, the provisions of the pilot transition policy for replacing business tax with value-added tax have clarified that medical services provided by medical institutions are exempt from value-added tax.
3. Problems faced by the "business tax to value-added tax" reform in the life service industry
The life service industry mainly includes catering industry, accommodation industry, medical education, housekeeping service industry, laundry and dyeing industry, hairdressing and beauty industry, bathing industry and other service industries. It is characterized by dispersed operators and direct facing of final consumers. Regarding the upcoming “business tax to value-added tax” reform, the life service industry faces the following problems:
1. The output tax rate is 6% and the input tax rate is 17%. Will there be a large amount of leftover credit?
2. Are the agricultural products purchased by catering enterprises not allowed to be deducted from input, or is the input deducted calculated at 13%?
3. Are there different tax rates for dine-in services and takeaways? How to supervise them?
4. Do “free” benefits provided to guests, such as room upgrades, “free” breakfast or wireless Internet access, need to be treated as sales?
5. A large number of restaurants and hotels have incomplete or even no accounts. How to calculate and pay VAT?
Although after the value-added tax is levied in the life service industry, enterprises can deduct the taxes contained in outsourced products and services, which has a tax reduction effect. However, due to the different values ??and proportions of outsourced products and services, different enterprises have different degrees of tax reduction. Big difference. The final change in corporate tax burden depends on the net effect of the superposition of tax cuts and tax increases.